Telecom service providers seek abolition of Swachh Bharat levy

The key recommendations on both direct and indirect taxes, include suggestions on rate of interest, CENVAT credit, deductibility of spectrum fees paid and tax withholding on distributors margin on sale of SIM cards and prepaid vouchers, COAI said in a statement.Muntazir Abbas | ETTelecom | Updated: January 18, 2016, 20:06 IST

NEW DELHI: GSM lobby group Cellular Operators Association of India (COAI) Monday sought clarity tax regime including withholding taxes and removal of Swachh Bharat Cess, as a part of pre-Budget proposals to the Union government.

The key recommendations on both direct and indirect taxes, include suggestions on rate of interest, CENVAT credit, deductibility of spectrum fees paid and tax withholding on distributors margin on sale of SIM cards and prepaid vouchers, COAI said in a statement.

Given the fact that there are multiple other levies such as license fee, applicable on telecommunication industry, Swachh Bharat Cess should not be levied on telecommunication services, it said.

The Central Government has imposed SBC at the rate of 0.5 percent on provision of all taxable services with effect from 15 November 2015.

A clarification may be issued that payments made in connection with the trading or sharing of spectrum are not in the nature of royalty and hence do not attract withholding tax obligations under the provisions of section 194J, the Act or any other withholding tax provisions, it said in a statement.

This, according to COAI will bring clarity on payments made in consideration for the spectrum acquired in the course of recently-announced spectrum trading.

The group also sought finance department's intervention and said that tax authorities have adopted inconsistent positions while assessing different telecom operators based on conflicting interpretations.

"Tax treatment of the amortization of such spectrum fees has been a subject matter of diverse and conflicting interpretations under the Income-tax Act, 1961," COAI added.

The association has also demanded reasonable interest rate on delayed payments, arguing that the current rate of 30% is penal in nature.In the 2014-15 budget, the government has increased the rate of interest on delayed payment of service tax to 30%.